El Amel de Microfinance's Bond Issue Falls Short of Expectations
In May 2024, El Amel de Microfinance issued a 10 million Tunisian dinar (Mtnd) bond, without resorting to a public savings appeal. The bond had a 5-year term and offered extremely attractive conditions: a fixed rate of 11.50% gross (9.2% net) or a variable rate of TMM + 3.5% gross. Based on a simulation at the time, the TMM was 7.980%, resulting in a net return of 9.184%.
However, it appears that this offer did not attract investors, who preferred to subscribe to other opportunities, despite being less profitable. After extending the deadlines, subscriptions were closed with only 3 Mtnd.
We believe that the mistake lies in the lack of a rating. There was no risk assessment by an independent organization, especially since the financial performances remain unknown to the general public. As a small player operating in a promising and lucrative business, the risks do not seem to be well-exposed. The quality of the issuer's signature remained a major question mark for many investors, especially given the abundant offer on the market, both corporate and sovereign.
The ideal approach would be to better prepare for the next issue, so that it takes place during a less crowded period, away from the two remaining tranches of the national bond issue. It is also essential to improve communication and financial presentation of the institution to the general public. Finally, it is crucial to obtain a guarantee or rating. If one of these conditions is lacking during the next issue, we do not foresee a better collection.
